Can An Insurance Company Bring a Legal Malpractice Claim Against Defense Counsel It Hired For Its Insured?

I serve on the Standards Committee of the National Board of Trial Advocacy, a division of the National Board of Legal Specialty Certification. Our members have a duty to report legal malpractice claims that have been filed against them, so from time to time I see claims filed by liability insurance companies against defense counsel that the companies hired to defend insureds.

So, when I saw this article in the Spring 2011 edition of the Federation of Defense and Insurance Counsel Quarterly, I thought it deserved to be seen by a broader audience.

The article explains that

When an attorney commits malpractice in defending an insured, the damage is often shouldered by the insurer rather than the insured. Even if the insured suffers some of the damage, the amount may not be sufficient to motivate the individual to pursue a malpractice claim against her attorney, especially given the fact that she has likely already been involved in litigation for some time. The insurer, on the other hand, likely suffers the lion’s share of the damage caused by the malpractice. As one court noted, it is inequitable to require an insurance company to absorb the loss due to negligent defense counsel without a legal remedy. Accordingly, allowing these claims provides a remedy to the insurer when the insurer has suffered detriment due to the negligence of its hired defense counsel.

(Footnotes omitted.)

The article then gathers and explains the law on the issue of the right of the insurer to bring a claim and the various theories of recovery.

This article will give a jump start to those researching the law on the right of an insurance company to sue a defense lawyer for legal malpractice.